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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

The S&P’s subdivision of its five wave upswing that began from the April low of 1814.36 completed an expanding-impulse pattern into the Sep. 19th high of 2019.26. The same sequence using fib-price ratios measured within two points of the actual high. Furthermore, the intermediate degree five wave impulse upswing measuring from the June ’12 low measured to 2014.12, just a handful of points deviation from the actual traded high. These factors combined indicate a formative high has been reached, not only for the S&P 500 but also for other U.S. indices. ###Other bearish indicators such as waning volume breadth, divergence in advance/decline ratios and underperformance from the Russell 2000 small-cap index also corroborate the bearish outlook. One caveat that must be monitored closely is Europe’s index failure to break above the existing June highs. The Eurostoxx 50 and Xetra Dax came close to retesting those June highs but failed to break them. This means that the existing Sep.’14 highs ended truncated 5th waves or they have yet to complete upside objectives. The latter seems less likely now that U.S. indices have turned downwards although downside acceleration in Europe during the coming week would resynchronise the U.S. and Europe in a more emphatic way. It must be said that our current forecasts depict the U.S. decline as merely a counter-trend adjustment to the preceding upswing that began from June ’12 as intermediate wave (3). This would still translate into a multi-month decline of around -16% per cent but it seems highly improbable that an Armageddon collapse would occur at this juncture given the mismatch of medium-term wave counts in both Asian indices and basis our commodity ‘inflation-pop’ scenario. 29th September 2014

Financial Updates Currencies

Currencies (FX)

Original targets for both the US$ index and Euro/US$ have been approached. The substructure of the price swings from their August low (US$) and high (Euro) however suggests a continuation in the direction of the larger trend. This raises upside targets for the US$ index from 8551 to 8593 – a reversal from that resistance is expected to trigger a counter-trend decline in the weeks ahead, with idealised support towards 8356+/-. For the Euro, strong downside support to halt the current sell-off is measured towards 1.2604 – a reversal from there should trigger a temporary rally towards 1.3011+/-. Overall, the strong momentum ###present in both contracts corroborates the longer-term objectives, with targets measuring towards 8885+/- for the US$ index and towards 1.2400+/- for the Euro/US$. Sterling has not yet staged another attempt towards the ‘after-referendum’ high of 1.6525 which is in line with expectations that this high completed an ‘X’ wave within an ongoing double zig zag decline that will continue lower towards ultimate objectives at 1.5680-37 in the months ahead. A break of short-term support at 1.6162 would reinforce this outlook whereas a short-term reversal and subsequent upside acceleration from current levels would maintain the possibility that the 1.6025 September low completed the decline from 1.7192 in its entirety as a single zig zag. Meanwhile, US$/Yen is still strong and thus prone to an attempt higher. A smaller fourth wave might have concluded at 10825 which indicates upside targets towards 11141 for the subsequent fifth basis fib-price-ratio measurements. The larger picture remains valid, with ultimate targets projecting into a high of 11238-58 in the next several weeks. 29th September 2014

Financial Updates Bonds

Bonds (Interest Rates)

Mario Draghi’s visit to Vilnius in Lithuania last week and his subsequent comments reiterated the ECB’s determination in combatting low inflation in the Eurozone bloc. The ECB’s continued commitment to begin buying private sector assets and maintaining low interest rates underpins the German DE10yr yield declines of last week. Late last week, the yield broke ###below secondary support at 0.913%. Although this was marginal but now increases the probability that yields will continue lower for the foreseeable future. This also extends primary wave 5 decline from last September’s high with downside targets towards 0.536% although we do not expect to see this traded until year-end. By contrast, the US Federal Reserve continues its dialogue in providing and forewarning to the markets that its withdrawal of quantitative easing will ultimately result in an earlier than expected hike in interest rates next year. The US10yr yield has undergone a short-term retracement from the mid-Sep.’14 high of 2.655% and is set to resume higher within the next week. This continues a five wave impulse pattern in advance from the August low to confirm an intermediate-term directional change confirming an uptrend in progress. 29th September 2014

Commodities

Recent price action for gold and silver is in line with expectations based on the larger picture that advocates continuation lower in the months ahead. Gold’s short-term 4th wave counter-trend correction unfolded into a running flat sequence completing at 1230.71. This puts the precious metal in a vulnerable position with immediate downside potential to original support at 1198.33-82.50. A short-term recovery is expected afterwards prior to continuation lower. ###The short-term outlook for silver is similar – the current sell-off is likely to continue towards 17.05+/- prior to a counter-trend rally to 17.97+/- and additional downside. The biggest difference between silver and gold is the larger pattern structure – whereas gold is engaged in a conventional five wave expanding-impulse sequence from its March ’14 high of 1392.30, silver is shown unfolding into a five wave ending expanding-diagonal that already began from 25.12. This ‘pattern divergence’ could help to accommodate the gold/silver ratio which is currently trading at a 4-year high and suggests even lower levels for silver, beyond original expectations of 16.46-15. In a more conventional five wave pattern, price expansion should occur which would allow gold to underperform during the next weeks (as compared to silver) and thus lower the gold/silver ratio from 69.00+/- to 67.86+/-. Oil’s five wave decline from the August ’13 high of 112.24 is still in progress and projected to ultimate downside at 77.28 in the months ahead. Shorter-term, support is expected to 89.42+/- to finalise the 3rd of 3rd prior to a smaller fourth wave advance to 94.70+/-. Due to the structure evident during the last trading sessions, we have changed the very short-term downswing from 96.00 into an ending expanding-diagonal – this has no implications for the larger outlook but explains the overlapping price swings lately. 29th September 2014

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES